TaxCoach Briefs:    October 1, 2009

Volume 4, Number 41

• Marketing Minute: Tutela Quis Dignitas
• Member Resource: Closely-Held Insurance Company
• Member Resource: Member Call-In With Ed and Keith
• Did You Know?: Implementation Guides

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MARKETING MINUTE (EAL)
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TUTELA QUIS DIGNITAS

I've never had a conversation in Latin, and I doubt you have either. But we all know at least a handful of Latin catchphrases to impress our friends and make us sound edumacated.

Illegitimi non carborundum. (Don't let the bastards grind you down.)

Quid pro quo. (I'll scratch your back if you'll scratch mine.)

Res ipsa loquitur. (The thing speaks for itself.)

Now we've come up with a new one. A fancy Latin motto, just for TaxCoach members. And we think you'll like it.

Tutela Quis Dignitas. Charge what you're worth!

(I know, I know. Purists are already muttering it really ought to be "tutela quis vos es dignitas." But we're all friends, so we can drop some extraneous articles in favor of brevity and elegance. Besides, we're tax professionals. What do we know about Latin?)

Keith and I have spent almost five years marketing our TaxCoach system. In that time, we've spoken and met personally with literally hundreds of you. And if there's one single thing that we've learned you want, it's how to successfully charge what you're worth.

I wish there were "one thing" we could give you to accomplish that. In the end, it's more about mindset than specific strategies. You have to believe you're worth the premium fees you want to charge, then adopt a set of specific behaviors to establish and maintain your value in your clients' eyes.

However, we can ask some specific (and pointed) questions to identify where you need help with this process:

• Do you take your value for granted? You spend all day thinking about tax and financial strategies. You went to school for years to build a foundation of knowledge. You work hard to maintain your knowledge and skills, and you're curious and open to new ideas and strategies. So you see a sole proprietor earning $100,000 a year -- and paying employment tax on that amount -- you naturally ask yourself if an S-corp is an appropriate solution.

  But do you just blurt out the idea -- in a casual, offhand way that makes the client think it's as easy as falling off a rock -- and give that knowledge, training, and experience for free? Or do you think before you open your mouth, and realize that something you might take for granted can be magic for your client?

• Do you quantify your value for yourself and for your client? Let's say that in the example above, you recommend that your client establish an S-corp and determine that a reasonable salary is $50,000. You'll save them employment tax on $50,000, or roughly $7,500 in tax. When you prepare their first S-corp return, do you run the numbers to determine for yourself just how valuable you are? Do you give them a "dummy" return showing what their tax would have been without your help?

  Here's the bottom line: How can you charge clients what you're worth if you don't quantify what you're worth? Quantifying your value gives you the confidence to charge premium fees and helps your clients feel good paying them.

• Do you have effective systems for demonstrating your value to your clients? Remember, clients come to you for their numbers. How else are they going to see what you're worth if you don't tell them?

• Do you distinguish yourself from your competitors? If clients perceive that you offer the same value as your competitors, you'll have a hard time charging more than they do. So you have to redefine what it is that you give them. Stop giving your clients accounting, payroll, or tax-prep services. Clients can get those anywhere. Start giving them answers and solutions to their most bothersome and expensive tax and financial problems. (This, by the way, is the key to escaping "billable hours" forever.)

• Are you working with the right clients? We all want to charge premium fees. But not every client is willing to pay them. And some clients with simple tax and financial pictures can't really even benefit from premium services. Are you really targeting the right clients for premium fees and services? Or are you just taking anyone who walks in the door and hoping you can establish premium value regardless of their circumstances?

These are the sorts of questions you need to answer before you can tutela quis dignitas. So these are the sorts of questions we will focus on helping you answer. Be sure you pay attention to the discussion -- here in the Briefs, in the monthly Lineup, on the weekly Member Call-Ins, and at the periodic Roundtables we host across the country. (We're considering dedicating the entire 2010 advanced session to tuteling quis dignitas, and we're confident it would be our most popular session ever.)

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MEMBER RESOURCE (EAL)
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CLOSELY-HELD INSURANCE COMPANY SERVICES

Three weeks ago, we introduced a new module outlining the closely-held insurance company (also called a "CHIC" or "captive insurance company"). Briefly, a CHIC is bona fide property/casualty insurance company your client establishes to manage risk for your primary business or professional practice. A CHIC is a risk-management tool, not explicitly structured to minimize taxes. However, a CHIC also offers significant tax advantages as part of an overall risk-management strategy. And it's a potential gold mine for clients, though generally best-suited for clients with discretionary income of $100,000 or more.

Since 2002, the Service has issued substantial guidance to help captive owners properly structure and administer the strategy. Today, nearly all Fortune 500 companies have at least one captive, and often several. Even nonprofit organizations (including, for example, the University of Michigan) have formed captives to manage risks.

Traditionally, CHICs have cost north of $50,000 to establish and $45,000 annually to administer. However, a new generation of consultants has emerged to make the strategy more affordable.

Here at TaxCoach, we've teamed up with Benefit Administrative Services (BAS), a Charlotte-based consultant offering turnkey CHIC formation, administration, and reporting services for as little as $6,000 plus $5,500 annually. BAS can pay you a generous referral fee (fully disclosed, of course). Or, if you have the appropriate licenses, you can share comissions for investing premium reserves.

For more information, click here for the CHIC referral letter.

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MEMBER RESOURCE (KAV)
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MEMBER CALL-IN WITH ED AND KEITH

Ed and I had another busy call yesterday, with another new record number of attendees, and pile of great topics!

Here are some excerpts from the log of the questions raised by callers:

• Have you had time to prepare a sample letter to use Tax Coach with Financial Advisors/CFPs in a referral relationship?
• Can you contrast MERPs versus HSAs?
• Please tell me if this would be a good strategy for truckers, who are on the road much of the year, and actually sleep in their trucks: Let’s say you pay your employee $200 per day in wages, could you instead pay $50 per day in wages and $150 per diem. This would save the employee Income Tax and FICA Tax and would save the employer payroll taxes. I understand you do not have to actually spend the per diem amount, and you don't have to account for individual expenses.
• How do others handle charging clients who call and just want to ask you a quick question? Most of our clients think they pay us for preparation and questions should be free. We get hundreds of these calls a year, and we know we are losing fees by not charging for it.
• Is the 105 Plan good for a S Corp, or should the Corp do a 125 Plan ? Any other options ?
• Is there CPE with the Certified Tax Coach training?
• How should wages paid to a child by a sole proprietorship be reported on Schedule C? "Wages" would not match W-2 reporting, so should it be reported on another line item?
• I have a client who wants a tax projection for $300K, $400K, and $500K income. He wants to know what fee I will charge. I am looking at a defined benefit plan. He is looking at buying a commercial property. I am thinking about starting with a preliminary bid of $1,500. How would you prepare the presentation?
• RE the Madoff mess. You can deduct 95% in the year of loss. When do you take the other 5%?
• If you are also doing financial planning would you include the tax plan either as part of the overall plan or seperately?
• If you are amending an 08 return from a cost seg study do you need to wait until the IRS accepts the Form 3115?
• Is there a client application form that is standard? We have one for new clients but need to revamp after ten years.

If you're also looking for pointers on tax strategies or profiting from TaxCoach, join us for the next call, on October 7, at 1pm Eastern. Enter a question or just listen in on the repartee. Check the "Contact Us" button within TaxCoach for registration instructions.

Please note that while our elite members (All-Stars, Press Club, and Hall of Fame) can still schedule time directly with Ed as part of their coaching programs, we simply cannot answer marketing and tax-strategy questions via email or unscheduled calls. We'll have call-ins as many Wednesdays as we can, and we'll talk to you then.

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DID YOU KNOW . . . (KAV)
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IMPLEMENTATION GUIDES

. . . TaxCoach includes 18 separate Implementation Guides, outlining the steps necessary to put the more complex strategies into place? There are also Document Templates associated with these guides where applicable - and we've got more in the works. (You can even request a Guide or Template for your favorite strategy!)

You'll find the Implementation Guides and the Document Templates in the 'Forms & Templates' folder within the TaxCoach system.

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We're happy to answer your questions on TaxCoach content or features. (Save marketing and tax strategy questions for Member Call-Ins.) For best response, email support@taxcoachsoftware.com. If we think the answer will be useful to all of our members, we'll publish it (anonymously) here in the 'Member Q & A' section of TaxCoach Briefs.

Regards,

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